Factors influencing commercial buildings to obtain green certificates

Yueming (Lucy) Qiu, Xin Su, Yi David Wang

Research output: Contribution to journalArticle

2 Scopus citations


Identifying the key factors that influence commercial buildings’ decision to obtain voluntary green certificates is essential to building sustainability enhancement. Using commercial buildings in the state of New York, multinomial logit and nested logit models demonstrate that there is a significant correlation between the characteristics of commercial buildings (such as square footage, lot size, and years built) and green certification. More interestingly, if a commercial building is occupied by its owner, likelihood of green certification is actually smaller. This finding not only confirms that ongoing energy savings are heavily discounted when deciding whether to incur the upfront cost of green certification, but also suggests that the rental premium enjoyed by green buildings is likely greater in terms of present value than the expected operating cost savings. Another explanation could be that investor owners must operate in a competitive market for tenants while owner-occupiers do not operate in that competitive market, so they do not need to obtain green certificates to attract tenants. Consequently for policymakers, building owners that plan to rent out their commercial property space should be the early targets to promote green certification.

Original languageEnglish (US)
Pages (from-to)1-13
Number of pages13
JournalApplied Economics
Publication statusAccepted/In press - Sep 9 2016



  • commercial buildings
  • discrete choice analysis
  • split incentives
  • Voluntary green building certificates

ASJC Scopus subject areas

  • Economics and Econometrics

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